Child support for high-income parents
When income involves trusts, companies, or complex structures, the standard child support formula often doesn't tell the full story. I specialise in making sense of it.
Why high income complicates child support
The child support formula was designed for straightforward employment income. It works well in most cases. But when one or both parents have complex financial arrangements — trusts, corporate structures, investment portfolios, or income that fluctuates significantly — the formula can produce results that don't reflect reality.
I've spent much of my career working with families where income isn't simple. My background includes extensive work on tax-related child support matters, and I've been a guest specialist on Tax Talks addressing exactly these issues. That crossover between tax structures and child support assessments is where many of my clients' most significant questions arise.
Trusts, companies, and personal services income
Services Australia doesn't just look at your tax return. When determining child support income, they can — and regularly do — look behind business structures to assess what income is genuinely available to a parent. This includes:
- Family trusts: Distributions received, but also income that could have been distributed. The Registrar can treat trust income as available to a parent even if it was retained or distributed to someone else.
- Company structures: If you control a company, the income flowing through that company may be attributed to you — regardless of what salary you actually draw.
- Personal services income (PSI): Where your income is essentially from your personal effort but is routed through an entity, the PSI rules can mean that entity's income is treated as yours for child support purposes.
- Partnerships: Your share of partnership income, plus any drawings or benefits received beyond your formal income share.
Understanding how Services Australia views these structures — and where their approach can be challenged — is essential for any high-income parent involved in a child support matter.
What the cap means for your assessment
There is a cap on the combined parental income used in the child support formula, currently set at approximately 2.5 times the male total average weekly earnings. For the current period, that's roughly $192,000.
Income above this cap is not automatically included in the formula calculation. For high-income parents, this means the standard assessment may produce a figure that's relatively modest compared to the family's actual lifestyle and the children's reasonable needs.
This is where departure applications become important. Either parent can apply for a departure from the formula if they believe the assessment doesn't properly reflect the children's needs or the parents' capacity to provide. In high-income cases, the children's standard of living before separation is a key consideration.
Common questions from high-income parents
Yes. The formula uses a cap on combined parental income. Income above this cap isn't automatically included — but a parent can apply for a departure to have it considered. Whether a departure is granted depends on the specific circumstances, including the children's needs and standard of living.
Yes, and this is one of the most contested areas I deal with. Services Australia can look behind trust structures and include income that's available to a parent — even if it wasn't directly received. The key question is whether the parent has effective control over the trust and its distributions.
Services Australia has significant powers to investigate and attribute corporate income to individuals. If you believe the other parent's true income isn't being captured, a change of assessment application on reason 8 (income, property, or financial resources) can bring those structures into consideration.
Investment income — dividends, rental income, capital gains — is generally included in your child support income. The timing of when that income is received or realised can affect which financial year it falls into, which in turn affects your assessment. Strategic timing of investment decisions should always consider child support implications.
How I help high-income families
Whether you're the higher-earning parent concerned about an excessive assessment, or the other parent who believes the formula isn't capturing the true picture, I can help you understand your position and your options.
- Detailed analysis of complex income structures and how they affect your assessment
- Guidance on departure applications where the formula doesn't reflect reality
- Advice on structuring binding agreements that account for complex income
- Help understanding how tax obligations interact with child support liabilities
- Practical strategies for managing assessments during years of fluctuating income
Complex income? Let's make sense of it.
I'll help you understand how your financial structure affects your child support position — and what you can do about it.
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